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History HBS Class of 1964

(Slide I)

At the time he succeeded Benjamin Franklin as American ambassador to France,

Thomas Jefferson observed that he was only his successor as no one could replace

Mr. Franklin. That is the way I feel with regard to Art Bellows.

When Ed Hajim called to bludgeon me into delivering the class history and survey, I

undertook the task with a good deal of trepidation as it is our history and I was

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cognizant of the old adage: "If we could see ourselves as others see us, we would

never speak to them again."

There are those who would suggest that by our 50th reunion, we may well be

approaching the cusp of old age which is generally defined as the point at which we

realize that forever is not as long as it used to be. Be that as it may, despite the

inexorable pace of change and turmoil over the past 50 years, some things remain the

same; (Slide II):

Slide II

I. Queen Elizabeth II continues to reign over the British Commonwealth.

II. The US is still the paramount power.

III. The US dollar is the undisputed reserve currency.

IV. In spite of various attempts to form a viable third-party, the Republican and

Democratic parties are still firmly ensconced in a two-party system.

V. The New York Times and Wall Street Journal remain the dominant newspapers.

VI. The same colleges/universities remain preeminent.

VII. Canada continues to vanquish the US in hockey.

VIII. Russia, although much diminished from its days as the Soviet Union, remains a

troubling irritant.

IX. Despite the high cost of living, it remains extremely popular.

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I. Queen Elizabeth II continues to reign over the British Commonwealth; (Slide III).

II. The US is still the paramount power although less securely so in its own mind as

in Gallup Polls for the past 6 years Americans have ranked China above the US

as a world power (the latest ranking was 52% China – 31% US);

III. The US dollar remains the undisputed global reserve currency;

IV. In spite of various attempts to form a viable third-party, the Republican and

Democratic parties are still firmly ensconced as the only two political parties of

any substance; (Slide IV).

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V. The New York Times and the Wall Street Journal persist as the dominant

newspapers;

VI. The same colleges/universities remain preeminent but as underlined by

Professors Grossman and Rivkin's session yesterday, our primary and

secondary education have slipped dramatically in world rankings; (Slide V).

VII. As a Canadian, I am obliged to note that Canada continues to vanquish the US in

hockey; (Slide VI).

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VIII. Russia, although much diminished from its days as the Soviet Union, remains a

troubling irritant; (Slide VII).

IX. Finally, despite the high cost of living, it remains popular.

Nevertheless, we have experienced phenomenal change since graduation. It is

difficult to determine exactly when our wild oats began to turn to prunes and all bran

but that change began during the decade we attended HBS. For our decade of the

60s, arguably, underwent the most significant societal change in modern history.

The 60’s was a decade of contradictions. It was a decade in which a young

president inspired us and convinced us we could accomplish anything and

everything, but by the end of that decade as our leaders dispatched the youth of

America to die in the quagmire of Vietnam and as those leaders failed to keep pace

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with our civil rights aspirations, we lost confidence in them and no longer were

willing to defer to our betters. The fallibility of our leaders gave rise to the decline of

deference to some and legitimized protest. The pendulum swung to the excesses

of Students for Democratic Society, Kent State and the assassinations of John F.

Kennedy, Robert F. Kennedy, Martin Luther King, Jr., and Malcolm X; (Slide VIII).

But while the extremes of outrage have receded, that legacy of distrust persists to

this day. In 1964 76% of the population believed that government would do the right

thing; whereas, today only 19% hold that view.

Our decade began as the decade of selflessness as exemplified by "Ask not what

your country can do for you, but what you can do for your country" and the Peace

Corps and ended as the decade of self-absorption and self-expression as

evidenced by Timothy O'Leary, drugs, sex and Woodstock; (Slide IX).

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Yet our decade experienced marked progress in the advancement of human rights.

The 60’s unleashed the women's movement; (Slide X).

The pill was officially introduced in 1960. Betty Friedan wrote "The Feminine

Mystique" in 1962. Now (the National Organization for Women) was launched in

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1966 and the Women's Liberation Movement in 1967. The Women of Radcliffe

were deemed worthy of a Harvard degree in 1963 and HBS officially admitted its

first women in 1963. Whereas in 1960 males accounted for 61.9% of US college

graduates, by 2003 women had handily surpassed men and accounted for 57.4% of

all such graduates; (Slide XI).

Slide XI

1960 2003

Percentage of male graduates from US colleges

Percentage of female graduates from US colleges

61.9%

38.1%

42.6%

57.4%

1964 2015

Percentage of women at HBS 3% 41%

In our day men held virtually all the key political, business and finance positions.

Today we have Janet Yellen running the Federal Reserve, Mary Barra as CEO of

General Motors, Christine Lagarde in charge of the International Monetary Fund,

Angela Merkel as Chancellor of Germany and Drew Faust as President of Harvard

and you, in our survey, have overwhelmingly predicted that Hillary Clinton will be

our next president; (Slide XII).

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Our decade witnessed the most momentous advance in Civil Rights since

Reconstruction. The sit-ins began in Greensboro in 1960, the Freedom Rides in 1961,

the March on Washington 1963, Selma to Montgomery 1965 and the emergence of the

Black Panthers in 1966; (Slide XIII).

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The confluence of these pressures, Kennedy's assassination and President Johnson's

consummate political skills gave birth to the Civil Rights Act banning discrimination in

employment and public accommodation in 1964, the Voting Rights Act in 1965 and the

Fair Housing Act in 1968. An indication of the distance we have travelled is that the

presidential breakthrough in our decade was electing a Roman Catholic President for

the first time; whereas, 50 years later we, with less debate, were comfortable electing

an African-American President of the United States; (Slide XIV).

And our decade launched President Johnson's War on Poverty with the passage of the

Economic Opportunity Act in 1964. 50 years later, there has been limited progress as

the Census Bureau reported by 2012 the percentage of the US population in poverty

had decreased from 19 to 15 and on a supplementary measure including government

benefits a much more impressive decline from 26 to 16; (Slide XV).

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Slide XV 1964 2014

Percentage of US population living in 19% 15% poverty Percentage of US population living in 26% 16% poverty adjusted for benefits et al 1990 2010

Percentage of world population living 43% 21% in poverty Many more benefit from the introduction of Medicare and Medicaid through the Social

Security Act of 1965. But that advance is disappointing in light of the massive increase

in inflation adjusted GDP per capita over the same time frame. Indeed, John Kenneth

Galbraith struck a sensitive chord with his summation: "We won the War on Poverty.

We beat the poor."

Worldwide, the initiative to abolish poverty has been much more evident as even in the

two decades from 1990 to 2010, the percentage of the world population subsisting on

$1 per day ($1.25 per day by 2010) has dropped markedly from 43% to 21%.

In keeping with the decline of deference, Pop Art burst on the scene with Andy Warhol,

Roy Lichtenstein, Jasper Johns and Robert Rauschenberg employing items from

popular as opposed to traditionally elite culture. Although technically born in the

previous decade, Pop had its greatest impact in the 60’s and was officially introduced

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in 1962 by MOMA’s “Symposium on Pop Art.” The Pop Art phenomenon confirmed that

New York had definitively replaced Paris as the cynosure of world art; (Slide XVI).

In 1960, the music scene was radically and forever transformed by the formation in

Liverpool of the Beatles and their populist appeal. They quickly established themselves

as the best-selling band in history and indeed, earned Rolling Stone’s accolade as the

greatest artist of all time; (Slide XVII).

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Ours was the decade of the Surgeon General's Report when smoking abruptly shifted

from a social advantage to a liability; (Slide XVIII).

42% of the adult population smoked at that time. Today the percentage is 18 and I

suspect the percentage in this audience is well below that number; (Slide XIX).

Slide XIX

1960s Today

Percentage of population smoking cigarettes 43% 18.1%

The 60s was also the decade in which arguably, we came closest to nuclear

confrontation. President Kennedy drew a line, not in the sands of Syria, but in cement

that there would be no Russian nuclear weapons in the Western Hemisphere (Slide

XX) and faced down our Soviet adversaries.

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Finally, ours was the decade in which Neil Armstrong took "a giant step for mankind";

(Slide XXI).

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But it is now 50 years later and the extent of change is astounding. The key political

event may well have been the collapse of the Soviet Union and of Communism; (Slides

XXII and XXIII).

Slide XXII

Slide XXIII

1964 2014

Number of Countries in what was the Soviet Union

1 15

Percentage of the world that was/is communist

35 <1

Of the countries in existence today, the number that are/were communist

32 2

Percentage of the world’s population that was/is democratic

45 65

Number of countries (United Nations) 114 193

Number of countries (Olympics) 94 204 (2012)

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We have witnessed great strides in economic wellbeing since graduation. Some have

done particularly well; (Slide XXIV & Slide XXV).

Slide XXIV

Ed & Barbara Hajim's home in Manhattan

Slide XXV 1960 2014 (est)

US GDP per capita $2,881 $54,980

1964 2012

US GDP per capita (inflation-adjusted) $17,461 $45,336

1964 2014

Dow Jones Industrial Average 874.13 16,512.89

Tuition at HBS $1,750 $58,875

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But it was also an era of creative destruction. For example only 7 of the 30 companies

constituting the Dow Jones Index in 1964 remain in the 2014 index and only 4 of those

under the same name. Of the 30 component companies at the time of our graduation,

6 have filed under Chapter 11. The growth in the importance of finance to the

American economy is underlined by the shift from zero financial companies in the DJIA

in 1964 to 51/2 in 1964; (Slide XXVI).

Slide XXVI

Dow Jones Index 1964 Dow Jones Index 2014 Allied Chemical

Alcoa

American Can

AT&T

American Tobacco

Anaconda

Bethlehem Steel

Chrysler

DuPont

Eastman Kodak

General Electric

General Foods

General Motors

Goodyear

International Harvester

International Nickel

International Paper

Johns-Mansville

Owens Illinois

Proctor & Gamble

Sears Roebuck

Standard Oil of California

Standard Oil of New Jersey

Swift

Texas Corporation

Union Carbide

United Aircraft

US Steel

Westinghouse

Woolworth

American Express Boeing Caterpillar Cisco Chevron DuPont Walt Disney General Electric Goldman Sachs Home Depot IBM Intel Johnson & Johnson J.P. Morgan Chase Coca-Cola

McDonalds 3M Merck Microsoft Nike Pfizer Proctor & Gamble AT&T Travelers United Health Group United Technologies Visa Verizon Wal-Mart Exxon

The gini co-efficient, a measure of income inequality, has grown since graduation. In

1967 it was .397 and by 2011 was .47; (Slide XXVII).

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Slide XXVII

1967 2011

Gini Co-efficient United States

.397 .477

1964

2014

Average income of the 25 highest paid hedge fund managers

N / A $840,000,000

However, even the gini co-efficient understates the magnitude of the change at the

very top as in 2013, 25 hedge fund managers shared an income of $21 billion or $840

million each, the top 1% of the population is worth more than the bottom 90% and the 6

Walmart heirs are worth more than the bottom 41% of the populace.

Nor have countries participated equally in the prosperity of the last half century.

Indeed, some have profited enormously from the rule of law, property rights and

various positive governance measures while others have suffered abysmally from the

lack thereof; (slide XXVIII).

Slide XXVIII

1960 2014

(Est.)

Zimbabwe GDP / Capita in US dollars $281 $1,026

South Korea GDP / Capita in US dollars $155 $25,931

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The economic growth of the past 50 years was spurred by the expansion of world trade

and globalization. For example, even in the US’s relatively self-sufficient economy,

exports which constituted only 4.9% of US GDP in 1960, accounted for 13.8% by 2013.

More remarkably, world merchandise trade rose from 18.2% in the 50 years since

graduation to 52.4% of gross world product today. That, together with the rapid growth

in gross world product, implies that global trade has expanded a phenomenal 25.7

times since we decamped from HBS. Clearly, not all of us were convinced by the

placard in a Seattle protest march exhorting everyone to “join the worldwide movement

against globalization"; (Slide XXIX).

Slide XXIX

1960 2013

Exports as a percentage of US GDP 4.9% 13.8%

World merchandise trade as a % of gross world product trade in US dollars

Gross world product in 1990 US dollars (billions)

18.2%

$9,167

52.4%

$45,730

Politics has polarized significantly since our time at HBS. In those days we watched

news on one of three TV channels all of which, with more or less success, attempted to

provide a wide spectrum of views. Today there are over 1,000 cable channels and

untold internet sources. As a result, we draw our news and views from sources which

affirm our own opinions and inclinations, a phenomenon which encourages polarization

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and has rendered compromise which has traditionally been the bedrock of politics,

anathema.

45% of us identified ourselves as Republicans with only 19% as Democrats (Slide

XXX), but based on our answers to the social questions (32 to 36 in the survey) (Slide

XXXI), there is some question as to how welcome we feel ourselves in today's Grand

Old Party.

Slide XXX

Republican Democrat Independent

Would you consider yourself a: 44.9% 19.3% 35.8%

Slide XXXI

Yes No

Should we provide universal healthcare? 57.3% 42.7%

Should we legalize gay marriage? 65.0% 35.0%

Does climate change pose a real threat? 68.3% 31.7%

Should we have more stringent gun control 69.3% 30.7%

Do you believe in evolution? 97.4% 2.6%

In technology the advances have been unprecedented. We need only remind

ourselves that, at HBS, we calculated with slide rules; whereas today we can acquire

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almost any information we seek through our smart phones, i-pads or Google glass.

Credit and debit cards and mobile payments have greatly facilitated the ability to

transact and the change in our ability to communicate has been profound. At school

we kept in touch with friends and family through written letters or expensive land line

telephones. Today distance is no longer a meaningful cost factor in communications

as we employ e-mail, Facetime, Twitter, unlimited low cost cellular telephone plans and

several other means; (Slide XXXII).

Slide XXXII

The shift in mores has also been significant. Today we place much greater emphasis

on our own financial wellbeing. In 1966, 42% of students opined that achieving a well-

off financial position was a primary goal of college; whereas by 2005, 75% expressed

that view. Yet work is either less attractive and/or less available, probably a

combination of both. In 1964 80.6% of men between the ages of 20 and 64 were

gainfully employed but today that percentage has fallen to 67.6%; (slide XXXIII).

1964 Today

Written letters or expensive land line telephones

E-mail, Facetime, Twitter, unlimited low-cost cellular plans, et al.

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Slide XXXIII

1966 2005

Achieving a well-off financial position is a primary goal of college as completed by college freshmen

42%

75%

Men between the ages of 20 and 64 employed

80.6% 67.6%

Rampant grade inflation has been a feature of our more permissive society. For

example, in 1966, 19% of high school students graduated with an A or A-rating

whereas by 2013, 53% achieved that level; (Slide XXXIV).

Slide XXXIV

Grade Inflation

1966 2013

High school students graduating with an A or A- 19% 53%

At the same time, we have experienced a marked breakdown of the family. For

example, in 1964 7.7% of children were born in the quaint phrase out-of-wedlock while

today over 40% are born in that state; (Slide XXXV).

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Slide XXXV

Breakdown of the Family

1964 Today

Children born out-of-wedlock 7.7% >40%

Incarceration rates have escalated to the point where the US imprisons its population

at a rate of 2.7 times that of the next highest OECD country; (Slide XXXVI).

Slide XXXVI

Incarcerations

1960 2013

Incarceration rates per 100,000 population 180 710

On a more esoteric note, a Harvard study in 2010 estimated that the English language

contains 1,000,222 words and that we add 8,500 words per year. That implies

425,000 new words since we graduated in 1964. I do not question the breadth of our

vocabularies, but it may well be that not all of us have absorbed those 425,000

additional words, particularly in an era in which the number of words used by the

average person seems in rapid decline; (Slide XXXVII).

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Slide XXXVII

A 2010 Harvard study estimated there were 1,022,000 words in the English language

and that we add 8,500 words per year. New words in the 50 years since graduation

would then amount to 425,000.

My concluding comment may prove controversial and since I have learned from bitter

experience that people accept my ideas much more readily if I attribute them to

Benjamin Franklin, I shall shamelessly do so. Climate change which, even though

31.7% of you give it no credence, may well be the greatest long-term challenge we

face. The world population has exploded from roughly 3.3 billion in 1964 to

approximately 7.4 billion people 50 years later. At the same time, virtually all other

species are in decline. For example, vertebrates, our closest kin, have fallen 30% since

1970. While causality can be debated, it is indisputable that the weather patterns have

altered significantly in the past 50 years, the oceans are acidifying and the Arctic and

Antarctic glaciers are melting.